NELA Amicus Briefs

NELA Amicus Brief: Tatum v. RJ Reynolds (RJR) (4th Cir.)

In the Fourth Circuit case, Tatum v. RJ Reynolds Investment Committee, et al. (Case No. 13-1360), after RJR Nabisco Holdings Inc. spun off defendants R.J. Reynolds Tobacco Co. and R.J. Reynolds Tobacco Holdings Inc. in 1999, Nabisco stock was sold and removed from the pension plan. The plaintiffs argue that defendants hoped this sale and removal decision would make raise the Nabisco stock’s value by distancing it from litigation against the tobacco companies. The district court found that the plan had breached its fiduciary duties of procedural prudence by removing and selling the stock without a proper investigation, but then found that because a hypothetical prudent fiduciary “could” have taken this same action, the plan was absolved of liability—this was a far more lenient standard than the “would” have taken standard that plaintiffs urged the court to use. Our amici brief argues that the protections afforded by ERISA are of vital concern to workers of all ages and to retirees, as the quality of workers’ lives in retirement depends heavily on their eligibility for, and the amount of, their retirement and welfare benefits. In order to provide participants’ retirement security, we advocate that ERISA must be construed to actually protect the trillions of dollars in 401(k) plans by finding a fiduciary’s investment decision imprudent if a hypothetical prudent fiduciary more likely than not would not have made the same investment decision for the same plan at the same time.